India is the world’s second-largest gold consumer. Imports there last month plummeted by 99.5%.

Gold India

India, the world’s biggest consumer of gold after China, imported its lowest monthly volumes in at least a decade after curbs to control the coronavirus pandemic grounded air transport and shuttered jewelry stores.

Overseas purchases slumped 99.5% to 60 kilograms in April from 13 tons a month ago, according to a person with knowledge of provisional finance ministry data, who asked not to be identified as the information isn’t public. That would be the lowest monthly inflow in records going back to 2010, according to data available with Metals Focus Ltd.

Finance ministry spokesperson Rajesh Malhotra wasn’t immediately available for comment.

“ I don’t expect a recovery in imports or demand for the next three to five months at least,” Chirag Sheth, a consultant at the London-based Metals Focus, said by phone from Mumbai. Manufacturing in the sector will also take a hit due to a scarcity of workers, who have returned to their hometowns after the virus outbreak, he said.

A nationwide lockdown, which has been in place since March 25, has rippled through the country’s economy hitting incomes, jobs and shuttering many industries including airlines, and gems and jewelry.

Imports were negligible in April as most of the country’s imports are typically shipped by air, with a smaller volume coming via land from either Bangladesh or Nepal, said N. Anantha Padmanaban, chairman of the All India Gem and Jewellery Domestic Council. He estimates imports will halve this year to about 350 tons.

While India has eased some restrictions, that’s unlikely to help salvage economic growth this quarter — or even the fiscal year — as consumption continues to suffer. Gross domestic product is expected to contract by 24.8% year-on-year in the quarter started April, while getting the economy back on track is likely to be beset by multiple challenges as the resumption of activity faces hurdles including abiding by new virus protection protocols and supply side problems of labor and working capital, according to Bloomberg Economics.

Most jewelry stores across the country continue to be closed in what is turning out to be one of their longest shutdowns ever.

“The worst part is even if we open our stores, who will come to buy?” Padmanaban said. “They will question if it is very much required to exchange or buy jewelry or it is safer to be at home?”

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